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Across industry verticals, high-end fashion has been the quickest to adopt non-fungible tokens, which also makes a lot of sense. Notably, both high-end fashion and NFTs operate on the model of scarcity and exclusivity, which explains the luxury brands’ receptiveness towards the digital asset class. Globally brands are seeking to utilize these new tools to connect and engage with their customers. As in the rest of the world, NFTs are a buzz in China, especially among young generation consumers. To tap into the growing popularity, even though the Chinese government does not allow trading in NFTs, luxury brands are finding creative ways to reach their audiences. For instance,
To get the collection in front of Chinese consumers, the brand forged an alliance with Top Holder, the digital collectible platform owned by Weibo, in July 2022. Along with the global luxury brands, domestic brands have also shown rising interest in the digital collectible space to better engage with their existing and potential customers in China. For instance,
Another approach that luxury brands can opt for showcasing their NFT collection to young enthusiastic consumers in China is through strategic collaborations with the physical gallery. Notably, Sun, the co-founder of BCA Gallery promoted the NFTiff digital collection launched by Tiffany & Co in partnership with CryptoPunks.
Before the collection was released to enthusiasts around the world, the physical gallery showcased the collectibles on the LED screen. Although it is not clear what value the promotion brought to the final sales result of the NFT collection, Tiffany sold out the 250 collectibles within 20 minutes of its launch, each worth US$50,000 (30 Ethereum). In China, which is one of the largest luxury product markets globally, the NFT display was the only connection the firm made with potential Chinese consumers. No message was delivered about the NFT collection through any of its official channels in the country.
While luxury brands can forge alliances with compliant blockchains and issue digital collectibles for consumers, they should adhere to the regulatory framework developed by the authorities. For instance,
The idea of the Yvel NFT, which is backed by physical-asset security, is to provide digital assets with a level of stability, even in times of market volatility. Because luxury brands cannot attach financial characteristics to NFT collectibles, the Yvel NFT approach is not suitable for the Chinese market. Apart from this, luxury brands must also avoid processing transactions with virtual assets.
Despite the strict regulatory environment, there are loopholes that consumers can exploit. For instance, NFT holders can trade their collectibles with friends outside China. Furthermore, they can also trade their digital assets through OKX, a legally ambiguous crypto exchange, which rebranded from OKEx. Notably, the platform rebranded itself after partially relocating its employees outside China during the Beijing crackdown on the market. Consequently, luxury brands that are creating business opportunities through crypto-connected NFT collections outside China can still approach the Chinese market.
On the other hand, given the fact that China restricts secondary trading in the country, luxury brands can simply focus on branding and raising awareness. This is a more cost-effective way to get brand exposure among digitally savvy Chinese consumers.
To know more and gain a deeper understanding of the NFT market in China, click here.
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